What is a Mechanic’s Lien?

Mechanic’s liens in their modern form were first conceived by Thomas Jefferson, to encourage construction in the new capital city of Washington. They were established by the Maryland General Assembly, of which the city of Washington was then a part.

However, it is not likely that Jefferson single-handedly dreamed up the idea. A lien is a mechanism used by contractors and suppliers to force payment of outstanding monies due from the owner, tenant or landowner. A Mechanic’s Lien will assure that the owner completes all required payments to the contractors participating in the project. It is also sometimes called a material man’s lien or supplier’s lien which can be confusing for some people, but they all are in fact the same thing.

What is a Mechanic’s Lien Release Bond?

A Mechanic’s Lien Release Bond is a type of Surety Bond. If a contractor allegedly receives no payment for products or services, he or she can file a Mechanic’s Lien which prevents the other party from selling or transferring property and it allows the contractor to sue the other party.

With a Mechanic’s Lien Release Bond, the surety company guarantees the claim in the event that the court enforces the payment of the claim. It guarantees that the payment will be made if the lien is not successfully contested.

If a subcontractor or other entity has put a mechanic’s lien on your property, you can get a Mechanic’s Lien Release Bond to remove the lien.

How Does a Mechanic’s Lien Release Bond Work?

A Mechanic’s Lien Release Bond allows property owners to do with their property what they would if a lien was not present: sell the property, get further remodeling done, etc. In a way, it works as an extension of credit. The bond proves that the property owner has sufficient funds to pay the people involved.

It can also be referred to as a discharge of a Mechanic’s Lien Bond. The word discharge can cause some confusion because a discharge of Mechanic’s Lien Bond (Mechanic’s Lien Release Bond) does not extinguish the mechanic’s lien entirely. It discharges the lien from the property and attaches it to the bond.

The bond is usually issued at a percentage over the lien amount, depending upon the state in which the lien was placed.

Purpose of a Mechanic’s Lien Release Bond.

There are a few types of bonds that tie in with the construction industry. Each of them serves an entirely different purpose.

Two common entities that need to obtain Mechanic’s Lien Release Bonds are property owners and contractors who are obliged to discharge any mechanic’s liens filed by suppliers or subcontractors.

Its purpose is to remove the mechanic’s lien from real property and the mechanic’s lien then attaches to the bond until it is dismissed in some way.

Frequently Asked Questions

Q: Is there only one person responsible?

A: Sometimes. When building a multi-family property all owners could potentially be part of the process and everyone will be responsible for a portion of the claim.

Q: How long does a mechanic’s lien last?

A: Once filed, the mechanic’s lien will last for a period of one year. Mechanic’s liens on private commercial projects and on public improvements may be extended for one additional year.

Q: How do I satisfy a mechanic’s lien?

A: A satisfaction of a mechanic’s lien can be filed with the County Clerk or the public entity where the mechanic’s lien was filed. That is after you either post the Bond or pay off the lien.

When applying, the following information should be included for faster bonding.

2) Copy of the mechanic’s lien – A copy of the mechanic’s lien can be uploaded in the online application and will provide information to the amount of the lien and parties claiming that payment is still due.

Call us at 800.921.1008 to speak with a professional regarding your specific situation or apply below for a quick turnaround on your Mechanic’s Lien Release Bond.